Correlation Between Flexible Solutions and Stepan
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and Stepan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Flexible Solutions and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Stepan Company, you can compare the effects of market volatilities on Flexible Solutions and Stepan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Flexible Solutions with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Stepan.
Diversification Opportunities for Flexible Solutions and Stepan
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flexible and Stepan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Flexible Solutions is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Flexible Solutions International are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Stepan go up and down completely randomly.
Pair Corralation between Flexible Solutions and Stepan
Considering the 90-day investment horizon Flexible Solutions International is expected to generate 4.71 times more return on investment than Stepan. However, Flexible Solutions is 4.71 times more volatile than Stepan Company. It trades about 0.11 of its potential returns per unit of risk. Stepan Company is currently generating about -0.21 per unit of risk. If you would invest 399.00 in Flexible Solutions International on December 2, 2024 and sell it today you would earn a total of 170.00 from holding Flexible Solutions International or generate 42.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Flexible Solutions Internation vs. Stepan Company
Performance |
Timeline |
Flexible Solutions |
Stepan Company |
Flexible Solutions and Stepan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flexible Solutions and Stepan
The main advantage of trading using opposite Flexible Solutions and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, Stepan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Stepan will offset losses from the drop in Stepan's long position.Flexible Solutions vs. Orion Engineered Carbons | Flexible Solutions vs. International Flavors Fragrances | Flexible Solutions vs. Sociedad Quimica y | Flexible Solutions vs. Albemarle Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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